Opportunity Social Media IGI Small Size

227
Chapter 11
Opportunities and Challenges
of Social Media to the
Islamic Banks in Indonesia
Ahmad Rafiki
Universitas Medan Area, Indonesia
ABSTRACT
The Islamic banks in Indonesia have a serious issue of a low market share of 5%.
This emerged due to the limited/unvaried product range, low literacy and inclusion
level of Islamic finance, unfavorable perception for Islamic banking, and limited
distribution networks and outreach. All of these causes could be resolved by using social
media, which will bring several opportunities such as transparency and openness,
effective marketing channels, stakeholders’ relationship, social media content, brand
image and reputation, shariah compliance activity, learning and knowledge, and
greater personalization. Meanwhile, in using social media, the Islamic banks face
few challenges such as network infrastructure, negative comments, information
risk management, privacy, and deception. This chapter can be a reference to any
institutions, particularly the Islamic banks which associated with digital interfaces
and interactions in their daily businesses. Thus expectedly, the Islamic banks could
enhance the public trust and establish a good Islamic identity.
INTRODUCTION
Islamic banks are obligated to conduct their activities in accordance with shariah
principles, which strictly forbid any receipts or payments of interest. Other prohibited
DOI: 10.4018/978-1-7998-2257-8.ch011
Copyright © 2020, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
Opportunities and Challenges of Social Media to the Islamic Banks in Indonesia
activities include having or taking usury, gharar (uncertainty) and maysir (gambling).
All the guidelines are written clearly in Al-Qur’an and Hadith.
Islamic banking still takes a large portion of 75% on global Islamic finance total
asset. Meanwhile, in Indonesia, the largest portion of Islamic finance belongs to the
Islamic capital market contributed up to 93% of government sukuk issuance. The
total assets of Islamic banks in Indonesia reach US$29.94 billion, which is far behind
the total assets of Islamic banks in Malaysia with US$181 billion (GIFR, 2017).
Moreover, the Islamic banks in Indonesia have a low market share of 5% which
ironically contrasts with the potential as the most Muslim population of 265 million
in the world. Among the problem emerged are limited/unvaried product range, low
literacy and inclusion level of Islamic finance, unfavorable perception for Islamic
banking, lack of talent and qualified employees, limited distribution networks and
outreach, and only focus on the retail segment (Bappenas, 2015).
There are initiatives had been started and taken to resolve the above constraints,
one of them is through continuous socialization. By then, public awareness is
increasing and followed with the creation of public trust among the Islamic banks.
These actions are purposely to be done to stimulate the public to use Islamic banks’
financial solutions and promotethe Islamic banking sector in Indonesia.
In promoting products and services, the Islamic banks need to find the best and
effective tool to achieve their aim that is to increase its market share. The latest and
commonly used is social media. It is a low-cost channel which will enable the Islamic
banks to reach a broader audience and then communicate widely their products and
services’ offerings. Other uses of this social media are expanded to the recruitment
of highly talented employees, and support networks and outreach.
LITERATURE REVIEW
The Social Media
Social media can be defined as internet-based applications that foster creations and
exchange user-generated content (Kaplan & Haenlein, 2010). Its rapid global growth
is influenced by its ability to allow users to personalize their social media accounts
and to interact with other users across the globe (Zolkepli & Kamarulzaman, 2015).
Social media classified into two key dimensions: social presence/media richness
and self-presentation/self-disclosure (Kaplan & Haenlein, 2010). It also can be
grouped into two broad categories depending on their main purpose; a) expressive
social media where users express themselves by sharing text, video, picture, music;
and b) collaborative social media where users share knowledge or content and work
228
Table 1. Types of social media
No Main Usage Example Function

Provide freedom for users to express their feelings,
1 Blogs and microblogs Twitter
experiences, statements, and criticism on the platforms
Enable users to share multimedia content, such as
2. Content communities YouTube
e-books, videos, photos, images, and more
Social networking Allow users to connect by creating personal or social
3. Facebook
sites information that can be accessed by others
Social networking
4. Instagram Allow to share and update of photos and videos.
app
Source: Kaplan and Haenlein (2010)
together for a common goal (Kotler, Kartajaya, & Setiawan, 2010). There are types
of social media which designed to meet various needs of users as shown in Table 1:
The above types of social media are among the largest and fastest-growing
social media platforms. For example, Facebook and Twitter platforms have been
fundamentally used as marketing tools by most of the US companies (Joyce, 2011;
Barnes, Lescault, & Wright, 2013). Facebook has a massive increase of users by
25 percent in one year (Hockenson & Molla, 2013), while, Twitter has 36 percent
of the annual increase (Edwards, 2013). Both platforms have millions of active
users as the potential consumers that can get updates of information easily. Pan,
Vorvoreanu, and Zhou (2014) mentioned that Facebook provides extensive content
with relatively longer information, which is significant for influencing an audience
by sharing experience and delivering values. Meanwhile, Twitter enables prompt,
brief, and more on superficial discourses. Its simplicity is imperative for the public
to understand news easily.
Other social media platforms are Youtube and Instagram. Youtube creates the
opportunity for the provider of content to target a niche market which is focused
on their similar interest and need. Youtube is now the world’s 2nd biggest search
engine for more than 1,8 billion people registered on the site. Meanwhile, Instagram
is seen as the “rising star” which has a visual-sharing platform that allows users to
post photos and videos. Instagram is considered more follower-friendly in terms
of post visibility, tendency to comment, and share ability which allows Instagram
users to be more engaged with their followers (DeMers, 2017). In 2016, it had
approximately 500 million users, and this number has been continually increasing
since 2015. The user engagement level on Instagram brand posts reaches about 4%
of total followers, much higher than the figure for Facebook and Twitter of less than
0.1% (Vendramin, 2016).
229
Social Media in Indonesia
Islamic banks can take advantage of the usage of social media in Indonesia. In 2019,
over 150 million Indonesian are the users of social media, increased by 15-20%
compared in 2018. Below Table presents the figures related to social media users:
As presented in the below chart, there are more than 100 million users of social
media in Indonesia that potentially access the Islamic banks’ content. Assumably,
they like to see attractive and creative content that able to convince them to switch
from other content.
Other facts of social media in Indonesia which can be used as opportunities and
challenges for the Islamic banks as presented below:
Table 2. Figures related to social media users
User Monthly Worldwide (Million Users) - April 2019 Penetration of

Worldwide Indonesia Users Indonesia leading social
Social Media Platform
Users (Million (Million Users) / Share Rank in the networks in
Users) Percentage (%) World Indonesia (%)
Instagram 1000* 56 / 12.3% 4th 80

Facebook 2375 120 / 40.88% 4th 81
YouTube 1900** 50***/ 19.3% - 88
Twitter 330 22.8 /17.23% 3rd 52
*June 2018; **Sept 2018; *** Dec 2017
Source: Statista Internet (2018)
Figure 1. Digital in Indonesia

Source: McKinsey Asia PFS Survey (2017); We Are Social (2017); GSMA Intelligence (2017)
230
Table 3. Social media in figures in Indonesia
Facts Numbers
Average Daily Time Spent Using Social Media 3 Hours 23 Minutes
Believe that New Technologies offer More Opportunities than
71%
Risks
Believe Data Privacy and Protection are very important 79%
Has a Bank Account 36%
Searched Online For a Product or Service to Buy 45%
41.39
Mobile Network Infrastructure
(Out of a Maximum Score of 100)
Digital banking penetration has doubled in the last 5 years 58%
Frequency of digital channel usage in 2017 42%
Source: Google Consumer Barometer (January, 2018); Global WebIndex (2017); World Bank Global
Financial Inclusion (2015); GSMA Intelligence (2017); McKinsey Asia PFS Survey (2017).
The Islamic Principle of Using Social Media in Islamic Banks
All activities in the Islamic banks have to comply with the shariah principles. This
is aligned with the verse in the Holy Qur’an of Al Baqarah (2): 208 as follows:
O you who have believed, enter into Islam completely [and perfectly] and do not
follow the footsteps of Satan. Indeed, he is to you a clear enemy. (Al Baqarah (2): 208)
This verse explained that Allah the Almighty commanded His servants to embrace
Islam in its entirety and to avoid abandoning any part of it. All guidance have been
written as well as rules to be obeyed. Hence, in relation to social media, the Islamic
banks should act according to the shariah by means of maintaining a good image
as one of the Islamic institutions which they could consider as doing da’wah to all
customers (Muslim and non-Muslim).
Da’wah can be done in many ways including writing in the form of books, articles,
and other short messages or videos, in this case; Instagram, Twitter, Facebook, and
Youtube. This rapid growth of social media can be used by the Islamic banks for
disseminating the truth of information or news.
Moreover, the content of social media in Islamic banks must be right which can
be a reliable reference in helping adherents to be more obedient to Allah the Exalted,
able to avoid any controversies and any violations. Allah the Almighty will raise the
degrees of whoever informing others as he/she teaches others for some knowledge.
The role of social media in Islamic banks can be used to respond to any comments
particularly on negative issues, thus the truth can be explained. It is a ‘tabayyun’
231
platform for any misunderstood matters. This is in accordance with the verse of
Al-Qur’an in An-Nisa’ (4): 83 as follows:
And when there comes to them information about [public] security or fear, they
spread it around. But if they had referred it back to the Messenger or to those of
authority among them, then the ones who [can] draw correct conclusions from it
would have known about it. And if not for the favor of Allah upon you and His mercy,
you would have followed Satan, except for a few. (An-Nisa’ (4): 83)
Some consumers need pictures, photos and videos to understand the content of
social media easily. This is an opportunity for the Islamic banks to present a good
content and prepare verified materials which accordance with Islamic principles
to get consumers’ attentions. The Islamic banks should understand their limits and
responsibilities in creating any contents on social media, thus need to protect and
aware of not to reveal any inappropriate images or contain of unnatural meanings.
With this, the aim of increasing awareness and encouraging more interests in Islamic
banks’ products and services by the public can be attained.
METHODOLOGY
This chapter was conducted using a qualitative method of descriptive and content
analysis based on a review of literature from academic research journals, websites,
socia media platforms, electronic databases (secondary data), and other relevant
sources. From the sources of previous studies, the arguments and discussions are
created.
The Use of Social Media in Islamic Banks
The fact is, only 7.39% of the total social media users are accessing banking-related
matters (APJII, 2017). While none of studies analysing the adoption of social media
by the Islamic banks particularly in Indonesia. Although the following figures are
uncomparable with the figures of the conventional banks, the growing interest in
the Islamic banks’ contents is gradually significant via social media. Below are the
Tables of Islamic banks’ figures on Instagram, Twitter, YouTube, and Facebook:
The number of followers and posts on Instagram indicating potential responses
by the public on Islamic banks’ products and services. As it is depicted in the above
Table, Bank BNI Syariah has the most followers with 51,100, followed with Bank
Syariah Mandiri, Bank BRI Syariah, and Bank Muamalat Indonesia. In fact, BNI
232
Table 4. Islamic banks with it’s Instagram usage
No. Islamic Banks Instagram Account Posts Followers

1 Bank Muamalat Indonesia bank.muamalat 5,426 28,800
2 Bank Syariah Mandiri banksyariahmandiri 1,101 44,200
3 Bank BRI Syariah Brisyariah 2,307 36,300
4 Bank Mega Syariah bankmegasyariah 757 5,890
5 Bank Syariah Bukopin bank_syariahbukopin 792 2,906
6 Bank BNI Syariah bni.syariah 759 51,100
7 Panin Dubai Syariah Bank Panindubaisyariah.bank 111 268
8 Bank Aceh Syariah hababankaceh 579 5,752
9 Bank Sinarmas Syariah banksinarmas_syariah 841 6,407
10 Bank BJB Syariah bankbjbsyariah 662 9,280
11 Bank Syariah Al Salaam banksyariahalsalaam 556 4,258
Sources: Retrieved on 3th May 2019
Table 5. Islamic banks with it’s Twitter usage
No. Islamic Banks Twitter Account Following Followers

1 Bank Muamalat Indonesia @BankMuamalat 121 33,100
2 Bank Syariah Mandiri @syariahmandiri 5,819 260,000
3 Bank Mega Syariah @Mega_Syariah 11 295
4 Bank Syariah Bukopin @BsyariahBukopin 8,639 20,200
5 Bank BNI Syariah @BNISyariah 634 274,000
6 Panin Dubai Syariah Bank @panin_syariah 280 2,876
7 Bank Sinarmas Syariah @BankSinarmas_iB 26 2,299
8 Bank BJB Syariah @bankbjbsyariah 9 626
Syariah won the Satisfaction, Loyalty and Engagement (SLE) award in 2019 which
held by Marketing Research Indonesia (MRI) collaborated with Info bank. It can
be assumed that BNI Syariah, as the most followers, able to grow emotional bound
feelings with their customers, one of them through social media.
Twitter sends a short message to the audience/public and it would be a sufficient
way to remind and give comments. It is also could nominate the trending topic
with its hashtag (#) which indicates as a popular topic to be discussed. Both Bank
BNI Syariah and Bank Syariah Mandiri are the most followers with 274,000 and
260,000 respectively.
233
Table 6. Islamic banks with it’s YouTube usage
No. Islamic Banks YouTube Channel Subscriber Video

1 Bank Muamalat Indonesia Bank Muamalat 1,641 42
2 Bank Syariah Mandiri Bank Syariah Mandiri 1,920 91
3 Bank BRI Syariah BRI Syariah 1,108 14
4 Bank BNI Syariah BNI Syariah 777 56
5 Bank BJB Syariah Bank BJB Syariah 109 17
Table 7. Islamic banks with it’s Facebook usage
No. Islamic Banks Facebook Account Like

1 Bank Muamalat Indonesia Bank Muamalat 24,369
2 Bank Syariah Mandiri Bank Syariah Mandiri 76,161
3 Bank BRI Syariah BRI Syariah 56,542
4 Bank Mega Syariah Bank Mega Syariah 2,397
5 Bank Syariah Bukopin Bank Syariah Bukopin 2,143
6 Bank BNI Syariah PT Bank BNI Syariah 51,931
7 Panin Dubai Syariah Bank Panindubai Syariahbank 4,610
8 Bank BJB Syariah bank bjb syariah 14,805
9 Bank Syariah Al Salaam Bank Syariah Al Salaam 16,696
Both numbers of subscribers and videos are important signs to see the growing
interest of Islamic banks’ customers to their content via YouTube. Currently, Bank
Syariah Mandiri as the most subscribers (1,920) and videos (91) compare to other
Islamic banks. Some customers that like to see the full video to learn and get the
pictures of Islamic banks’ products and services. It is an easy, quick, and convenient
way to absorb things. With these facts of YouTube channels owned by the Islamic
banks, the information can be disseminated effectively and efficiently.
Meanwhile, Facebook offers complete features that everyone could interact
through chat, messages, pictures or videos. It is expected can attract more customers
from various interfaces. Based on its ‘like’ means at least that an individual has
attention to the content, Bank Syariah Mandiri has the most likes on its content on
Facebook, followed with Bank BRI Syariah and Bank BNI Syariah.
Below is a comparison of Instagram followers of top three conventional and
Islamic banks. It is also shows that the three of Islamic banks represent 18% of the
234
Table 8. A summary of social media by top five conventional banks
Instagram Twitter YouTube Facebook

Banks
Followers Posts Followers Subscriber Like
Bank Mandiri 162000 1037 126000 16815 279461

Bank Negara Indonesia 178000 3755 1100000 5151 333603
Bank Rakyat Indonesia 211000 1014 138000 7683 560735
Bank Cental Asia 209000 890 76300 22957 162508
Bank CIMB Niaga 191000 1406 69600 6396 1176812
Figure 2. Instagram followers of Islamic banks versus conventional banks
number of Instagram followers, whereby the number of Instagram followers of Bank

CIMB Niaga alone exceeds by 8% than those three Islamic banks.
Below is a comparison of Twitter followers of top three conventional and Islamic
banks. It is also shows that the three of Islamic banks represent 29% of the number
of Twitter followers, while the two conventional banks; Bank Mandiri and Bank
Rakyat Indonesia have less Twitter followers than the two of Islamic banks’ followers;
Bank Syariah Mandiri and Bank BNI Syariah.
Below is a comparison of YouTube subscribers of top three conventional and
Islamic banks. It also shows that the three of Islamic banks represent 9% of the
number of YouTube subscribers, whereby the number of Youtube subscribers of
Bank Rakyat Indonesia alone exceeds by 6% than those three Islamic banks.
Below is a comparison of Facebook likes of top three conventional and Islamic
banks. It also shows that the three of Islamic banks represent 8% of the number of
Facebook likes, whereby the number of Facebook likes of Bank Negara Indonesia
alone exceeds by 7% than those three Islamic banks.
235
Figure 3. Twitter followers of Islamic banks versus conventional banks
Figure 4. YouTube subscribers of Islamic banks versus conventional banks
Figure 5. Facebook likes of Islamic banks versus conventional banks
236
Based on the tables and figures presented above, there are important points to
be highlighted as follows:
§ The Islamic banks are aware ofthe crucial role of social media, thus, they open
their accounts and actively presented attractive content to persuade customers.
§ The Islamic banks have the potential of a huge number of active users using social
media in Indonesia
§ The Islamic banks realized to gain competitive advantage through social media
Opportunities in Social Media
With the elaborated use of social media, there are opportunities that can be exploited
by Islamic banks as follows:
a. Transparency and Openness
Both transparency and openness are interrelated. The social media’s active presence
can lead to further transparency and openness to the customers. Customers who
doubted the details of Islamic banking products, now they can see it and have all
the information needed. Some of the Islamic banks’ concepts are related to Islamic
jurisprudence which exposes debates and arguments. Through social media, everyone
can ask and give any explanation based on their understandings. In particular, for
non-Muslims, they might have the interest to know the Islamic banks’ products and
services, thus the social media is a suitable platform for them to learn.
With the new concepts of fintech and big data, social media can play a role in
distributing complete data, figures or content that can be accessed by customers
openly. Additionally, Harris and Rae (2009) explained that social media can help to
facilitate transparency where trust can be established between two parties. Trust is
one of the Islamic banks’ principles and related to amanah, which means to cooperate
or deal with the permitted parties according to the amanah given by customers.
Trust generates closer relationships with the consumers, which then consumers
can feel that the Islamic banks are friendlier, more real and more gracious towards
them. By emphasizing transparency, the banks’ employees can respond to negative
comments. When the Islamic banks’ systems are performed honestly and with an
emphatic manner, thus the followers’ trust can be regained and increased (Duncan,
2016; Shukle, 2015).
237
b. An Effective Marketing, Communication, and Promotion Channel
Many financial institutions including Islamic banks have started to utilize this social
media platform as one of the efficient channels, to communicate, reach out and
provide consumers with updated information including discounts on the products
and services, and other vital news. Social media also enables open communication
that helps companies to understand better their customers’ needs and motivates them
to proactively and efficiently respond to them (Parveen, et al., 2016).
For the millennials, the online interfaces and transactions bring easiness and
convenience, thus any marketing approaches can be used to attract their attentions.
Social media is less costly than mainstream media advertising, means able to
reduce marketing and communication expenses (Parveen, Jaafar, & Ainin, 2016).
It enables to identify key influencers of the audiences and respond it in a timely
manner (Weinberg & Pehlivan, 2011). With regards on costs matter, a consulting
company known as NM Incite which has a partnership with Nielsen and McKinsey
did a survey and found that social customer care costs around $1 per interaction
while using phone support costs at least $6, and further interaction per e-mail costs
$2.50 to $5 (BenMark, 2014).
Previously, the banks have widely used the TV or direct sales marketing/email
marketing to reach out their consumers but today the social media offers a unique
way to promote the products, thus it called as a very effective marketing tool (Mitic
& Kapoulas, 2012). The promotional activities can be accessed 24 hours a day and
7 days a week by consumers. In fact, 45% of the users in Indonesia are using online
platforms to buy products or services. With social media, the Islamic banks can do
a research on customer data, create customized advertising in a simple method, and
widen the coverage of markets through a deepening partnership that offers financial
services to customers anywhere in the world; eliminating geographical constraints.
c. Stakeholders’ Relationship
The Islamic banks use social media as an efficient platform to improve the relationship
between the company and other stakeholders such as government, suppliers,
distributors, customers, etc and then could figure out the needs of the stakeholders
and addressing its expectations. Constant interactions via social media may generate
effective relationships among stakeholders. Social media offers a unique opportunity
to reform the relationship between stakeholders from a mono or bi-directional
information exchange into a many-to-many communication process (Agostino, 2013)
which considered as a medium to increase engagement with potential customers by
publishing quizzes or rewards etc., that can help to improve services of the banks
(Kumar, Rajan, Gupta, & Pozza, 2017). These various benefits may explain why
238
about 79% of Fortune 100 companies use social media to communicate with their
stakeholders (Dekay, 2012).
Social media can be interpreted as a multi-directional communication between
parties where accurate and important data of the Islamic banks can be distributed
to the customers immediately. A relationship with stakeholders is created through
interactions with the absence of physical presence, offers flexibility to accommodate
various types of tasks and increases the individuals’ access to companies’ websites
(Stern & Ibarra, 2011; Tajvidi & Karami, 2017). The increase in social media’s
role and presence, will open ways to plan for future communication strategies and
enables businesses to build sustainable relationships by engaging their audiences
through exchanges of ideas (Ang, 2011; Ray & Singh, 2010).
d. Social Media Content
Refers to Instagram’s posts, the Islamic banks have a significant number of posts,
it is slightly lesser than the conventional banks. The content indicates that the
banks are having initiatives and efforts to introduce or promote their products. An
attractive content consists of information that can be read, see and understand easily.
The social media content allows creativity in presentations and aggressiveness in
conveying the news on products and services. As most of the consumers prefer to
have flexibility in uploading or updating the content, thus the Islamic banks must
deliver the ultimate customer experience through its content.
Nowadays, the number of followers of Islamic banks is increasing and received
positive comments from the consumers which often presented in attractive content,
thus the awareness of the Islamic banks’ products is increasing. This means, the
content plays an important role in the development of Islamic banks. Meanwhile,
the followers’ inputs through social media content can be analyzed to predict and
monitor customers’ trends, understand customers’ interests, emotions and behavior,
find and identify the priorities for future plans, and useful information for further
investigation and evaluation for the banks’ products and services.
The continuous improvement of the social media content is required to
accommodate the fact that users are spending 3 Hours 23 Minutes on an average of
their daily time of using social media. The audience attention is increasing because
social media store kinds of information which give various ideas. Additionally, with
42% frequency of digital channel usage in 2017 in Indonesia, there is a potential
of engaging more on social media content and more access to the Islamic banks’
products. Furthermore, a study of Deutsche Bank Research shows that social media
users have a stronger demand for financial information which contrasts with the less
desire to see a bank consultant face to face, i.e. to this user the personal contact is
slightly less important (Thomas, 2011).
239
e. Brand Image and Reputation
Studies show that social media communications strongly influence brand image
(Bruhn, Schoenmueller, & Schäfer, 2012). Through social media, the brands of
products appear and pop up daily with attractive content. Once the number of likes or
followers is increasing, it means the reputation is strengthened. Any differentiations
which notified by social media are associated with brand equity that influences
consumer’s brain. This asserted by Tajvidi and Karami (2017) that social media is
strengthening company branding, while Parusheva (2017) mentioned that another
role of social media in companies’ management practice is to build a brand image,
brand equity and to improve brand awareness. Most importantly, the Islamic banks
could promote Islamic identity and reputation through its products’ characteristics.
Thus, no reason for Islamic banks to not exploiting social media to grab these
opportunities.
In fact, the image of financial sectors is negatively perceived by the consumers
after the global financial crisis in 2008, where now the consumers’ trust need to be
rebuilt by capitalizing the social media (Parusheva, 2017).
f. Shariah Compliance Activity
The activity of using social media is permitted by the shariah. It meant that the
activities related to social media could be encouraged, enhanced and developed to
attract more customers and create awareness. Through social media, the Islamic
values and principles are exposed and will be known by the audience, which is
called da’wah. This is considered as an effective and efficient da’wah of reaching
wider coverage and having lower costs.
Through social media, the disputes and disagreements of financial products can
be discussed. For example, the issue of e-money product or cashless transactions
which explained by the contemporary fiqh muamalah to do not lead to riba. This
open argument will be responded by the social media users or at least get their
attention to the principles of the products/concepts.
g. Learning and Knowledge
The educational level impacts the understanding level of consumers on the products’
offerings. The products and services of the banks related to financial literacy in
which not familiar with, the public has the opportunity to learn via social media.
This knowledge and willingness to learn are able to resolve an issue of consumer
awareness that becomes a classic constraint faced by the Islamic banks. Parusheva
(2017) mentioned that digital channels allow people to go through Facebook, Twitter,
240
YouTube, Instagram and other social networks to gain the necessary education and
information regarding the services, products and financial institutions. This asserted by
Weinberg and Pehlivan (2011) that social media helps companies educate audiences
about their services. Even it can use to recruit qualified employees (Madia, 2011).
No doubt that social media channels have become a very significant source of
information in our world today. Companies including the Islamic banks rely on social
media purposely to get the latest news. Thus, they did efforts to make social media
as a medium of transfer of knowledge in which will bring the invaluable return to
the businesses for the long term. Additionally, with evidence of 58% digital banking
penetration has doubled in the last 5 years in Indonesia, it opens possibilities for the
audience to learn the Islamic banks’ products or at least can cultivate the consumers’
interests to know about the Islamic banks’ products.
h. Greater Personalization and Support
Personalization is an opponent of privacy. A partnership between banks and social

media users will open up new doors in terms of personalizing customer experiences
where data are shared and exchanged between the two parties. Some customers
looking for privileges or they want faster and accurate information for all questions
being asked, thus the Islamic banks must prepare with sufficient materials through
social media.
Personalization creates a sustainable relationship by knowing and understanding
each other better. The social media tries to build strong communication which
consumers may ask questions without any limits. Through personalization, Islamic
banks are creating customer satisfaction and loyalty. Moreover, social media is already
being used for customer support by most of the banks, but a deeper partnership with
social media platforms will empower the banks to offer more support services. This
will help in establishing better relationships with customers to further improve the
response time. This asserted by Shankar & Khan (2012) that the bank institutions are
aware of the power of social media and actively used the social platforms because
they want to meet the rising customer expectations for personalization, demonstrating
value to them and positive social care.
As 36% of the social media users have a bank account, they might need additional
services related to the products. The supports to customers consist of account
information, cards’ promotions or applications, updates on profit and loss offers,
important dates and events. Personalization and support made every consumers feel
that they are treated professionally and proportionally.
241
Figure 6. Opportunities of social media to Islamic banks
Challenges of Social Media
Despite having opportunities in using social media, there are challenges for the
Islamic banks as follows:
a. Network Infrastructures
The technology infrastructures may differ in each country particularly for the Internet
network. As many of the social media users are mobile users, they expect to access
the content of Islamic banks’ products and services anywhere and anytime, thus
the Internet network must be supported especially in the suburban or rural areas.
With the fact of a score of 41.39 out of 100 for the network infrastructure in
Indonesia, it is quite slow, which may discourage the interactions of two parties. The
Islamic banks have to find other alternatives to get a reliable network and faster, to
be able to reach the customers in real-time. Moreover, 71% of social media users in
242
Indonesia believe that new technologies offer more opportunities than risks, which
means that a network is required to support of using new technologies.
b. Negative Comments and Unresponsiveness Queries
The social media offers direct replies and comments from the public or customer,
some of them are negative comments. The Islamic banks need to have full-time
personnel to control and counter those nagged comments. The personnel must have
capabilities to be actively switching, managing and answering those inappropriate
comments. This is considered as a serious challenge for the banks.
An interaction is an important part of social media. One of the ways to boost such
interactions is by responding comments left on the relevant posts. Data generated
from gramwiki.com showed that only five out of the nine Indonesian Islamic banks
(namely Bank Syariah Mandiri, Bank Mega Syariah, BRI Syariah, Bank Syariah
Bukopin, and BNI Syariah) which were sufficiently responsive in addressing their
followers’ comments. However, it seems those Islamic banks do not use social media
particularly Instagram to monitor customer trends. This indicates the encouragement
of capitalizing the use of social media still low.
c. Information Risk Management
There is possibly sensitive information that may disclose intentionally through the
Islamic banks’ content where the public can access it instantly. Thus the Islamic banks
have to manage and concern on the safety and security of the social media pages as
a platform related to the financial transactions. To anticipate this case, the Islamic
banks may appoint a manager/supervisor that specialized in managing these risks
associated with IT (information technology) compliances and functions. Meanwhile,
social media sites pose an equal threat to the security of personal information and
other concerned data. The hacking of the websites is the most common feature and
considered an immediate threat to the audience of social media.
As Islamic banks carry the identity of Islam, it should be noted that every
aspect/item posted in social media must be compliance with Islamic values stated
in Al-Qur’an and Hadiths. Therefore, every posts made on social media must avoid
conflicts with shariah principles. An example of making promotions, which include
giving gifts to customers. This issue must be carefully posted because it needs further
review as guided in fiqh muamalah. Consultation to the experts or advisory board
is required to ensure the posted items comply with shariah, however, it has to go
through a certain process and will take times.
243
d. Privacy
The primary challenge posed by social media is privacy. Many people restrain
themselves from taking part in a dialogue with a fear of losing their privacy. Some
banks’ employees are disclosed by negative comments from customers without
going through a proper channel on how to criticize the products’ contents, systems
or procedures. At the same time, the Islamic banks’ employees have to carefully
upload or create captions that oppose certain tribe, race, religion, nationality or
other personal matters. It is a direct message that can be seen by the audience in
real-time, thus any misinterpretation or misunderstanding may emerge. Based on
the users’ profile that 79% of users believe that data privacy and protection are very
important elements associated with social media content.
e. Deception
The identity of the individual who joins the social networking sites may either
original or fake. This is due to the identity disclosures which are shared with
unknown users. Nowadays, there are many cases of deception around the world that
have been registered. Social media turns out to be an easy way of deceiving people
using technology. For the Islamic banks, they may face or interact with unknown
users who could copy or imitate some content.
CONCLUSION
To achieve the expected outcomes, Islamic banks need to ensure that social media
helps to increase their engagement with their ‘likes’ and followers. The Islamic
banks have no choice except to manage optimally the social media with its attractive
content. Those opportunities can be exploited and resulted in the best outcomes for
the development of Islamic banks. The Islamic banks should develop multi-ways of
communications and respond directly all comments from the audience, thus creating
emotional attachment and better relationships with customers. As it is mentioned
by Kumar et al (2017) that companies can retain a higher level of client satisfaction
and emotional attachment if they focus their efforts on maintaining positive service
experiences for their clients.
Islamic banks have to collaborate with associated parties or authorities to find a
solution for the mentioned challenges. A thorough evaluation of the level of social
media adoption is crucial in order to know how effective social media is helping
the Islamic banks to disseminate information to the public and identify areas that
need improvements.
244
Figure 7. Challenges of Social Media to Islamic banks
Authors have suggested that the use of social media supports business institutions’
marketing and promotion, deliver real-time and more responsive customer services
(problems and issues), send and share information on a regular and continual basis,
enhance customer relationships, offer solutions and reach to everyone that is in
need, improve an organization’s reputation, provide public access to information,
create product innovations, participate and collaborate in providing shared social
values, and develop customer loyalty and trust (Arnaboldi, Busco, & Cuganesan,
2017; Castells, 2011; Deloitte, 2013; Smith & Sanderson, 2015; Harris & Rae,
2009; Parveen et al, 2016; Tajvidi & Karami, 2017; Etter, Ravasi, & Colleoni, 2017;
Parusheva, 2017). However, to maintain Islamic banking’s reputation in upholding
Islamic values, the useof social media at Islamic banks should be managed to avoid
conflict with the principles of shariah.
It is found that the listed Islamic banks still have difficulties in creating two-
way interactions with the public through social media. An increasing number of
245
followers and get constructive comments may encourage Islamic banks to improve
their business performance.
REFERENCES
Agostino, D. (2013). Using social media to engage citizens: A study of Italian

municipalities. Public Relations Review, 39(3), 232–234. doi:10.1016/j.
pubrev.2013.02.009
Ang, L. (2011). Community relationship management and social media. Journal of
Database Marketing and Customer Strategy Management, 18(1), 31–38. doi:10.1057/
dbm.2011.3
APJIII. (2017). Indonesia Internet Usage for Business Sector 2017. Retrieved from https://
apjii.or.id/downfile/file/SurveiPenggunaanInternetSektorBisnis2017versienglish.pdf
Arnaboldi, M., Busco, C., & Cuganesan, S. (2017). Accounting, accountability, social
media, and big data: Revolution or hype? Accounting, Auditing, & Accountability
Journal, 30(4), 762–776. doi:10.1108/AAAJ-03-2017-2880
Bappenas. (2015). Masterplan Arsitektur Keuangan Syariah Indonesia. Jakarta:
Bappenas Press.
Barnes, N. G., Lescault, A., & Wright, S. (2013). 2013 Fortune 500 are bullish on
social media. Retrieved May 2, 2019 from www.umassd.edu/cmr/socialmediarese
arch/2013fortune500/
BenMark, G. (2014). Why the COO should lead social-media customer service.
Retrieved July 16, 2019 from http://www.mckinsey.com/business-functions/
marketing-and-sales/our-insights/why-the-coo-should-lead-social-media-customer-
service
Blackshaw, P. (2006). The consumer-generated surveillance culture. Retrieved June
28, 2019 from http://www.clickz.com/showPage.html?page=3576076
Bruhn, M., Schoenmueller, V., & Schäfer, D. (2012). Are social media replacing
traditional media in terms of brand equity creation? Management Research Review,
35(9), 770–790. doi:10.1108/01409171211255948
Castells, M. (2011). The Rise of the Network Society (3rd ed.). Oxford, UK: John
Wiley & Sons.
Dekay, S. H. (2012). How large companies react to negative Facebook comments.
Corporate Communications, 17(3), 289–299. doi:10.1108/13563281211253539
246
Deloitte. (2013). Who says banks can’t be social? Become a social bank, inside and
out. Ontario, Canada, Deloitte LLP.
DeMers, J. (2017). Why Instagram Is The Top Social Platform For Engagement
(And How To Use It). Retrieved August 20, 2019 from https://www.forbes.com/
sites/jaysondemers/2017/03/28/why-instagram-is-the-top-social-platform-for-
engagement-and-how-to-use-it/
Duncan, S. (2016). Brands, Handle Negative Criticism on Social Media Like a
Champ. Retrieved August 11, 2019 from https://www.salesforce.com/blog/2016/03/
brands-handle-negative-criticism-social-media-champ.html
Edwards, J. (2013). Twitter’s “dark pool”: IPO doesn’t mention 6541 million users
who abandoned Twitter. Retrieved May 26, 2019 from www.businessinsider.com/
twitter-total-registered-users-v-monthlyactive-users-2013-11
Etter, M., Ravasi, D., & Colleoni, E. (2017). Social Media and the Formation of
Organizational Reputation. Academy of Management Review. In-Press.
GIFR. (2017). Global Islamic Finance Report. Retrieved July 10, 2019 from http://
www.gifr.net/gifr_2017.htm
Global WebIndex. (2017). GWI Social. Retrieved August 18, 2019 from https://
cdn2.hubspot.net/hubfs/304927/Downloads/GWI%20Social%20Summary%20
Q3%202017.pdf
Google Consumer Barometer. (2018). Trended Data. Retrieved September 10, 2019
from https://www.consumerbarometer.com/en/trending/?countryCode=ID&catego
ry=TRN-NOFILTER-ALL
Harris, L., & Rae, A. (2009). Social networks: The future of marketing for small business.
The Journal of Business Strategy, 30(5), 24–31. doi:10.1108/02756660910987581
Hockenson, L., & Molla, R. (2013). Facebook grows daily active users by 25
percent, mobile users by 45 percent. Retrieved May 29, 2019 from http://gigaom.
com/2013/10/30/facebook-grows-dailyactive-users-by-25-percent-mobile-users-
by-45-percent/
Joyce, S. (2011). 2011 UMass study of Fortune 500 companies and social media:
23% blog, 62% use Twitter, 58% Facebook. Retrieved May 8, 2019 from www.
q4blog.com/2011/10/27/2011-umassstudy-of-fortune-500-companies-and-social-
media-23-blog-62-use-twitter-58-facebook/
247
Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges
and opportunities of Social Media. Business Horizons, 53(1), 59–68. doi:10.1016/j.
bushor.2009.09.003
Kotler, P., Kartajaya, H., & Setiawan, I. (2010). From Products to Customers
to the Human Spirit: Marketing 3.0. Hoboken, NJ: John Wiley & Sons.
doi:10.1002/9781118257883
Kumar, V., Rajan, B., Gupta, S., & Pozza, I. D. (2017). Customer engagement in
service. Journal of the Academy of Marketing Science.
Madia, S. A. (2011). Best practices for using social media as a recruitment strategy.
Strategic HR Review, 10(6), 19–24. doi:10.1108/14754391111172788
McKinsey Asia, P. F. S. Survey (2017). Asia’s digital banking race: Giving customers
what they want. Retrieved September 22, 2019 from https://www.mckinsey.com/~/
media/McKinsey/Industries/Financial%20Services/Our%20Insights/Reaching%20
Asias%20digital%20banking%20customers/Asias-digital-banking-race-WEB-
FINAL.ashx
Mitic, M., & Kapoulas, A. (2012). Understanding the role of social media
in bank marketing. Marketing Intelligence & Planning, 30(7), 668–686.
doi:10.1108/02634501211273797
Pan, J., Vorvoreanu, M., & Zhou, Z. (2014). Social media adoption in disaster
restoration industry. Construction Innovation, 14(3), 346–369. doi:10.1108/CI-03-
2013-0014
Parusheva, S. (2017). Social Media Banking Models: A case study of а practical
implementation in banking sector. Икономически изследвания, 3, 125-141.
Parveen, F., Jaafar, N. I., & Ainin, S. (2016). Social media’s impact on organizational
performance and entrepreneurial orientation in organizations. Management Decision,
54(9), 2208–2234. doi:10.1108/MD-08-2015-0336
Ray, S. K., & Singh, S. (2010). Blog content based recommendation framework using
wordnet and multiple ontologies. Proceedings of the International Conference on
Computer Information Systems And Industrial Management Applications, 432-437.
Cracow, Poland, 10.1109/CISIM.2010.5643502
Shankar, R., & Khan, S. (2012), The Next Generation Social Banking Ecosystem:
A Road Map for Banks, Happiest Minds Technologies. 1-13. Retrieved August
01, 2019 from http://www.happiestminds.com/whitepapers/The-Next-Generation-
Social-Banking-Ecosystem--A-Road-Map-for-Banks.pdf
248
Shukle, R. (2015). How to Handle Customer Complaints via Social Media. Retrieved
June 03, 2019 from https://www.socialmediaexaminer.com/how-to-handle-customer-
complaints-via-social-media/
Smith, L. R., & Sanderson, J. (2015). I’m Going to Instagram It! An Analysis of
Athlete Self- Presentation on Instagram. Journal of Broadcasting & Electronic
Media, 59(2), 342–358. doi:10.1080/08838151.2015.1029125
Statista Internet. (2018). Mobile Internet & Apps. Retrieved August 28, 2019 from
https://www.statista.com/markets/424/topic/538/mobile-internet-apps/
Stern, S., & Ibarra, P. (2011). Digital government: Creating the social media game
plan. Government Finance Review, 27(5), 8–14.
Tajvidi, R., & Karami, A. (2017). (in press). The effect of social media on firm
performance. Computers in Human Behavior. doi:10.1016/j.chb.2017.09.026
Thomas, M. (2011). Social media in finance: Users want tangible benefits, not
friendship, Deutsche Bank Research, E-Banking Snapshot 37, pp. 1-4. Retrieved July
16, 2019 from http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/
PROD0000000000273185.pdf
Vendramin, S. (2016). Why Banks Need Instagram. Retrieved May 12, 2019
from https://medium.com/@stefanovendramin/why-banks-need-instagram-
3b66747093b7
We are Social. (2017). Digital in 2017. Retrieved September, 26 2019 from https://
www.juancmejia.com/wp-content/uploads/2017/03/Digital-2017-WeAreSocial-y-
HootSuite.pdf
Weinberg, B. D., & Pehlivan, E. (2011). Social spending: Managing the social
media mix. Business Horizons, 54(3), 275–282. doi:10.1016/j.bushor.2011.01.008
World Bank Global Financial Inclusion. (2015). Global Financial Inclusion (Global
Findex) Database. Retrieved August 10, 2019 from https://datacatalog.worldbank.
org/dataset/global-financial-inclusion-global-findex-database
Zolkepli, I. A., & Kamarulzaman, Y. (2015). Social media adoption: The role of
media needs and innovation characteristics. Computers in Human Behavior, 43,
189–209. doi:10.1016/j.chb.2014.10.050
249
ADDITIONAL READING
Al-Kandari, A. A., Gaither, T. K., Alfahad, M. M., Dashti, A. A., & Alsaber, A. R.
(2019). An Arab perspective on social media: How banks in Kuwait use instagram
for public relations. Public Relations Review, 45(3), 101774. doi:10.1016/j.
pubrev.2019.04.007
Cannell, S., & Travis, B. (2018). YouTube Secrets: The Ultimate Guide to Growing
Your Following and Making Money as a Video Influencer. Lioncrest Publishing.
De Veirman, M., Cauberghe, V., & Hudders, L. (2017). Marketing through Instagram
influencers: The impact of number of followers and product divergence on brand
attitude. International Journal of Advertising, 36(5), 798–828. doi:10.1080/0265
0487.2017.1348035
Hjorth, L., & Hinton, S. (2019). Understanding social media. SAGE Publications
Limited.
Kane, B. (2018). One Million Followers: How I Built a Massive Social Following
in 30 Days. BenBella Books.
Kerpen, D. (2015). Likeable social media. McGraw-Hill.
Kusumasondjaja, S. (2018). The roles of message appeals and orientation on
social media brand communication effectiveness: An evidence from Indonesia.
Asia Pacific Journal of Marketing and Logistics, 30(4), 1135–1158. doi:10.1108/
APJML-10-2017-0267
Macarthy, A. (2018). 500 Social Media Marketing Tips: Essential Advice, Hints and
Strategy for Business Facebook, Twitter, Pinterest, Google+, YouTube, Instagram,
LinkedIn, and More! CreateSpace Independent Publishing Platform.
Rahmawati, T. Y., Dewi, M. K., & Ferdian, I. R. (2019). Instagram: Its roles in
management of Islamic banks. Journal of Islamic Marketing, ahead-of-print(ahead-
of-print). doi:10.1108/JIMA-11-2018-0213
Weintraub, M., & Litwinka, L. (2013). The complete social media community
manager’s guide: essential tools and tactics for business success. John Wiley & Sons.
KEY TERMS AND DEFINITIONS
Al-Qur’an: literally meaning “the recitation” which is the central religious

text of Islam, which Muslims believe to be a revelation from God (Allah). It is the
250
sacred writings of Islam revealed by God to the Prophet Muhammad during his life
at Mecca and Medina.
Challenges: (The situation of being faced with) something that needs great mental
or physical effort in order to be done successfully and therefore tests a person’s ability.
Da’wah: an Arabic word which has the literal meaning of “issuing a summons”
or “making an invitation”.
Deception: is an act or statement which misleads, hides the truth, or promotes a
belief, concept, or idea that is not true. It is often done for personal gain or advantage.
Hadith: A collection of traditions containing sayings of the prophet Muhammad
which, with accounts of his daily practice (Sunnah), constitute the major source of
guidance for Muslims apart from the Al-Qur’an.
Islamic Banks: known as non-interest banking, is a system based on the principles
of Islamic or Shariah law and guided by Islamic economics. Islamic banks make
a profit through equity participation which requires a borrower to give the bank a
share in their profits rather than paying interest.
Opportunities: A favorable or advantageous circumstance or combination of
circumstances.
Privacy: is the ability of an individual or group to seclude themselves, or
information about themselves, and thereby express themselves selectively.
Shariah: an Islamic religious law that governs not only religious rituals but also
aspects of day-to-day life in Islam. It is literally translated as “the way.”
Social Media: are interactive computer-mediated technologies that facilitate
the creation and sharing of information, ideas, career interests and other forms of
expression via virtual communities and networks.
Transparency: is an element used in science, engineering, business, the humanities
and in other social contexts, operating in such a way that it is easy for others to see
what actions are performed.
251

Opportunity Social Media IGI Small Size

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Opportunity Social Media IGI Small Size

Uploaded by

Copyright:

Available Formats

227

The Social Media

Table 1. Types of social media

No Main Usage Example Function

Social Media in Indonesia

Table 2. Figures related to social media users

User Monthly Worldwide (Million Users) - April 2019 Penetration of

Instagram 1000* 56 / 12.3% 4th 80

Figure 1. Digital in Indonesia

Table 3. Social media in figures in Indonesia

The Islamic Principle of Using Social Media in Islamic Banks

The Use of Social Media in Islamic Banks

Table 4. Islamic banks with it’s Instagram usage

No. Islamic Banks Instagram Account Posts Followers

Table 5. Islamic banks with it’s Twitter usage

No. Islamic Banks Twitter Account Following Followers

Table 6. Islamic banks with it’s YouTube usage

No. Islamic Banks YouTube Channel Subscriber Video

Table 7. Islamic banks with it’s Facebook usage

No. Islamic Banks Facebook Account Like

Table 8. A summary of social media by top five conventional banks

Instagram Twitter YouTube Facebook

Bank Mandiri 162000 1037 126000 16815 279461

Figure 2. Instagram followers of Islamic banks versus conventional banks

number of Instagram followers, whereby the number of Instagram followers of Bank

Figure 3. Twitter followers of Islamic banks versus conventional banks

Figure 4. YouTube subscribers of Islamic banks versus conventional banks

Figure 5. Facebook likes of Islamic banks versus conventional banks

Opportunities in Social Media

a. Transparency and Openness

b. An Effective Marketing, Communication, and Promotion Channel

d. Social Media Content

e. Brand Image and Reputation

f. Shariah Compliance Activity

g. Learning and Knowledge

h. Greater Personalization and Support

Personalization is an opponent of privacy. A partnership between banks and social

Figure 6. Opportunities of social media to Islamic banks

Challenges of Social Media

b. Negative Comments and Unresponsiveness Queries

c. Information Risk Management

Figure 7. Challenges of Social Media to Islamic banks

Agostino, D. (2013). Using social media to engage citizens: A study of Italian

KEY TERMS AND DEFINITIONS

Al-Qur’an: literally meaning “the recitation” which is the central religious

You might also like